Security Life Insurance (USL) Company Ltd., the firm's manager has said the company need not have failed.

Mr. James DeCouto is certain that the Government acted hastily in 1992 in petitioning the court to wind the insurer up. He had spent five years, under Government supervision, bringing it closer and closer to solvency.

And he backed up staff accounts that they were all collecting premiums in good faith, unaware the Government sought to wind up the company without consulting with any of them and without giving them prior knowledge.

Mr. DeCouto moved to set the record straight about what happened when the company went bust five years ago. He said that even the Trinidadian authorities were hoping the Bermuda Government would wait just a little longer, because talks were ongoing with firms that could have taken over the Bermuda company's portfolio.

The creditors meeting will be held on April 10. The provisional liquidator, Mr. Gil Tucker, has already reported to creditors that once that meeting is over and the dividend cheques have been cleared, the liquidation will be finalised.

But Mr. James DeCouto stated yesterday that he too, was a victim of the financial tragedy, having lost more than $50,000 in pension money that was owed after 25 years of service.

The Bermuda firm, it has been learned, is the most significant of the Trinidad-based company's subsidiaries that actually went into liquidation. It was said to have collapsed under debts of $2,351,139. The liquidation was to consume $405,000 of the $1,045,000, collected by the liquidator and $640,000 (representing 27 cents on the dollar) was being paid out in dividends.

In fact, in a deal that began last summer, even the Trinidadian parent company itself was taken over by another insurer, Nationwide, saving their entire portfolio of insurance.

Ironically, it was financial reports from the same USL in Trinidad that began the whole Bermuda saga in the late 1980s.

Mr. DeCouto recounted how the Registrar of Companies found in August, 1987 that the financial reports from Trinidad did not meet Bermuda's requirements, and he reported to the Finance Minister that the 4,400 policyholders in Bermuda were at risk, if the Bermuda portfolio could not be segregated from Trinidad's operations.

The former manager said in a prepared statement: "The Registrar and Minister of Finance decided unilaterally to segregate the portfolio under the supervision of Mr. DeCouto while negotiations were held with Trinidad.'' He said that his guidelines included that every effort would be made to repatriate those investments that were shown in the Trinidad balance sheet as belonging to the Bermuda portfolio. A balance sheet and profit and loss statement was to be prepared with redefined investments and actuarial liabilities.

It had become apparent, he said, that the Trinidad statements were subject to doubt. The guidelines included an attempt to maintain the sales force and premium collections, and, remit to Trinidad only those funds required for administration and reinsurance.

The guidelines still included a provision for the payment of claims and the preparation of a quarterly report to the registrar reflecting the reduction in shortfall between the actuarial reserve and the actuarial liabilities.

There were promises from Trinidad that reserves would be transferred to the Bermuda account. But after the segregation of the accounts, it was discovered that the realistic investment reserve in Bermuda was under $200,000.

Mr. DeCouto claimed he was still able to increase the investment reserve in the five years to 1992 to about $900,000 after all claims and expenses were paid.

But by February of that year, a new Registrar had been appointed and the Finance Minister was concerned that the money might be dragged into bankruptcy proceedings in Trinidad. Mr. DeCouto said that as a result, he was instructed to stop issuing new contracts.

Not much later, he was told to continue to collect the premiums for existing policyholders, but pay out no claims.

Mr. DeCouto said that such a directive presented him with a conflict, and he asked for confirmation, noting that if liquidation was coming, the Registrar would have to forbid the collection of any premiums. But if not, the company should be mandated to pay the benefits purchased by premiums paid for health and disability.

Mr. DeCouto said: "It was agreed that premiums collected after March 1st, 1992 would be held in escrow pending the sale of the local portfolio to another company, or, the injection of funds to compensate the reserve shortfall.'' He said that if neither of the events occurred, he would have continued to improve the position to eventual solvency, or the portfolio would have been declared insolvent, resulting in the refunding of all premiums collected after March 1, 1992.

Five month s later, the Supreme Court was petitioned by the Registrar to wind up the company.

When contacted for comment, Dr. Saul said he will be discussing the matter further with the Registrar of Companies.